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Relative Strength Alert For DTF Tax-Free Income Fund

The DividendRank formula at Dividend Channel ranks a coverage universe of thousands of dividend stocks, according to a proprietary formula designed to identify those stocks that combine two important characteristics — strong fundamentals and a valuation that looks inexpensive. DTF Tax-Free Income Fund presently has an above average rank, in the top 50% of the coverage universe, which suggests it is among the top most "interesting" ideas that merit further research by investors.

The DividendRank formula at Dividend Channel ranks a coverage universe of thousands of dividend stocks, according to a proprietary formula designed to identify those stocks that combine two important characteristics — strong fundamentals and a valuation that looks inexpensive. DTF Tax-Free Income Fund ( DTF) presently has an above average rank, in the top 50% of the coverage universe, which suggests it is among the top most "interesting" ideas that merit further research by investors.

But making DTF Tax-Free Income Fund an even more interesting and timely stock to look at, is the fact that in trading on Tuesday, shares of DTF entered into oversold territory, changing hands as low as $15.24 per share. We define oversold territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.

In the case of DTF Tax-Free Income Fund, the RSI reading has hit 28.2 — by comparison, the universe of dividend stocks covered by Dividend Channel currently has an average RSI of 39.8. A falling stock price — all else being equal — creates a better opportunity for dividend investors to capture a higher yield. Indeed, DTF's recent annualized dividend of 0.84/share (currently paid in monthly installments) works out to an annual yield of 5.39% based upon the recent $15.582 share price.

A bullish investor could look at DTF's 28.2 RSI reading today as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side. Among the fundamental datapoints dividend investors should investigate to decide if they are bullish on DTF is its dividend history. In general, dividends are not always predictable; but, looking at the history chart below can help in judging whether the most recent dividend is likely to continue.

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Looking at the universe of stocks we cover at Dividend Channel, on 2/12/15, DTF Tax-Free Income Fund will trade ex-dividend, for its monthly dividend of $0.07, payable on 2/27/15. As a percentage of DTF's recent stock price of $15.62, this dividend works out to approximately 0.45%.

Looking at the universe of stocks we cover at Dividend Channel, on 12/11/14, DTF Tax-Free Income Fund will trade ex-dividend, for its monthly dividend of $0.07, payable on 12/31/14. As a percentage of DTF's recent stock price of $15.33, this dividend works out to approximately 0.46%.